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According to a recent report, an insider disclosed that the U.S. Commodity Futures Trading Commission (CFTC) is ready to sign an Ethereum futures contract if it meets the requirements.
The anonymous insider suggests that they have read through the suggestions and are willing to consider applications submitted for an Ether futures contract – provided it is in compliance with all the rules laid down by regulators.
Signing an Ether futures contract is predicted to bolster the faith of institutional investors in the virtual asset. John Todaro, the director of currency research at Tradeblock, affirmed that this action will be of great impact to the Ethereum Blockchain and the crypto space in general. He explained that most institutional investors have mandates that stop them from buying the digital currency, which is mostly due to the issue of custody. Therefore, a cash-settled futures contract will eliminate the custody issue and even price manipulation, giving room for many new traditional investors such as hedge funds to invest in the virtual asset.
This action is expected to cause more than an investment rush in the crypto space. Signing an Ethereum futures contract will grant the CFTC a better opportunity to oversee the Ethereum world, the second largest cryptocurrency. Although it already regulates the space, this action will give the CFTC some additional oversight on the Ethereum market. This, in turn, will strengthen the faith of other regulatory bodies like the SEC in the crypto space, which may lead to the signing of the first exchange-traded fund (ETF) in the crypto sphere.
It will be recalled that the CFTC published a Request for Input (RFI) late last year, asking from the public to submit any relevant information on Ethereum, including how ETH transactions may be audited and additional clarifications about its proof-of-stake. The RFI was an attempt for the regulators to get a good understanding of the crypto coin following the realization that a one-size-fits-all rule does not apply to the crypto space.
It should also be recalled that the signing of a Bitcoin futures contract caused an upsurge in the market. After allowing Bitcoin futures in 2017, the first companies to launch it received a stream of investors who were happy to invest in the virtual coin.
Some analysts suggest that the Bitcoin futures contract signed in 2017 is a part of the reason for the tremendous spike in Bitcoin’s price throughout that year. Although others believe it could have caused some harm too, it is obvious that it must have done more good in the space than harm.